By Peter.
The Federal Government of Nigeria has confirmed that 149 companies currently benefiting from the Pioneer Status Incentive (PSI)—a 3-5 year corporate income tax holiday—will retain their tax exemptions for at least two more years under transitional provisions in the new tax regime effective January 2026.
Announced by the Nigerian Investment Promotion Commission (NIPC) on December 18, 2025, this protection aims to safeguard investor confidence amid the shift from PSI to the new Economic Development Tax Incentive (EDTI) model in the Nigeria Tax Act 2025.
Key Details on the Transitional Safeguard
- Current PSI Beneficiaries: Out of 693 applications (2017–Q2 2025), 304 granted, 64 denied, 1 cancelled—leaving 149 active firms.
- Investment Impact: PSI has attracted N8.7 trillion in capital and created 58,897 direct jobs, mainly in manufacturing and Lagos.
- Why Retention?: Prevents abrupt loss of incentives, encouraging ongoing investments during the reform transition.
NIPC Executive Secretary Aisha Rimi highlighted $10 billion+ investment commitments in 2025, crediting reforms for boosting confidence.
Shift to New Regime: PSI Phased Out, EDTI Introduced
The Nigeria Tax Act 2025 (effective Jan 1, 2026) replaces blanket tax holidays with performance-based incentives:
- EDTI: 5% annual tax credit (up to 25% total) on qualifying capex for 5 years—tied to productive investments in priority sectors (manufacturing first).
- No new PSI applications post-November 10, 2025.
This addresses past PSI abuses while aligning relief with measurable economic multipliers.
For businesses eyeing incentives, transitional protections signal stability—consult NIPC for eligibility.
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